It’s the human condition, isn’t it? When inexperienced, but newly ‘educated’, we often convince ourselves we know what we don’t know. As a young man I must’ve been the poster boy for that concept. Almost like it was yesterday, the memory of my first ever day as a ‘real estate guy’ is still fresh. Walking from the parking lot to the office’s front door, then entering, the first thing that hit me was the smell of strong coffee — Navy Chief-strong coffee. I knew far more then, than I do today. It’s not even close. What a fool. It was a couple months past my 18th birthday. Know what I really knew that day about real estate? How to drive myself from home to the office, that’s how much.
Though I ‘succeeded’ that first day, it was, to be kind, a wholly fraudulent success. The details aren’t important, boring actually, but it was the beginning of a learning curve which has never stopped. Being second generation real estate broker, son of the broker-owner actually, was subject to constant ‘review’ and ‘constructive criticism’, exceeded only by those who’ve experienced life as a preacher’s kid. I make that judgment with utmost confidence, as I experienced both firsthand. Don’t try it at home.
Though oft times the never ending review and criticism was petty, hurtful, and of little or no value, much of it was priceless. I learned two lessons that can’t be bought, but instead must be accepted.
1. With rarest exceptions, all of what we do is about results of one sort or another.
2. We can either gain experience, expertise, and knowledge — or we can pay for it.
The addendum to #2 is that we too often end up paying for it through our crummy results. When we talk ourselves into the false belief that we have the requisite EE&K, it hardly ever turns out well. The real problem is when we somehow Gump our way through, get a relatively positive result, then conclude we’ve ‘taken our game up a notch’. Speaking for myself, it wasn’t ’til years later that I figured out how lucky I’d been. Not only that, but how gracious my mentors had been. They knew my results were mediocre on the best of days, but they simply kept mentoring me, knowing my epiphanies would come in their own good time. And did they ever.
What does this have to do with real estate investing?
We tend to measure ourselves and our growth in EE&K by the use of relative comparison — usually to others. This isn’t bad in and of itself, but it does have a tendency to delay the brutal truth, which is:
That compared to the actual EE&K required to produce the results for which we work so hard, we’ve not hit the mark.
The most common problem hindering my advancement in real estate investment was the one with which Grandma pegged me perfectly when she said I was behaving as if I’d mastered my job, when in fact I was still at the apprentice stage. Ouch — and a half.
That attitude, the one telling me I’d reached a level not nearly attained, was the main reason I lost three properties early in my career. I didn’t have nearly the EE&K I fancied myself as possessing. Looking back, the results I produced were empirical evidence of that verdict. Our grandmas put it another way when they said we were gettin’ too big for our britches. ‘Course, the problem with investing in real estate, short or long term, is that we can’t always discern what we’ve actually wrought. It can be a vicious catch-22 of sorts.
We don’t know the questions to ask, so we don’t have the answers we don’t know we need.
I’ve seen first-hand how fooling ourselves into overvaluing our EE&K can lead to some decidedly distressful results. Doing things yourself, and/or learning by trial and error, at least when it comes to real estate investing, is akin to lighting dynamite and running. Sooner or later you ain’t gonna be fast enough. Doing that when the market shows signs of transition? A financial death wish.
I saw it in 1974 — in 1979 — in 1991ish — 2006 — and again in 2008/9. All those times, though never the same circumstances, had a few things in common. One of ’em was that the do-it-yourselfer, for the most part, got slaughtered — as did those like my much younger self, who thought they had the answers they needed. Why?
They’d found all the answers for all the questions they’d ever asked. What exploded their plans, though, were the answers to the questions they never knew to ask.
Expertise — Experience — and Knowledge. Can’t. Be. Faked.
I’ve written here, on BiggerPockets more than two years now, I’ve read countless posts in which very wise authors have beseeched readers to either gain that EE&K, align themselves with someone who has ’em, or hire it. Listen to these people, cuz they know whereof they speak.
Wisdom is only valuable when we use it, and only costly when we don’t.
Nothing trumps results.